Luxury good marketers found a new way to combat gray market imports into the United States. In March 1995, the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount drugstore chain from selling Givenchy perfume with permission. The distinctive packaging of the perfume is also protected by the U.S. Copyright law. The ruling implies that:

Luxury good marketers found a new way to combat gray market imports into the United States. In March 1995, the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount drugstore chain from selling Givenchy perfume with permission. The distinctive packaging of the perfume is also protected by the U.S. Copyright law. The ruling implies that:

A) Givenchy can only be sold in copyrighted packages.
B) Costco and Wal-Mart will no longer be able to sell Givenchy.
C) Costco and Wal-Mart will be able to sell Givenchy with authorization.
D) gray marketers will be able to market with authorization.
E) discount drugstores cannot market a product resembling Givenchy's perfumes.


Answer: C

Despite the high expenses associated with operating elegant stores and purchasing advertising space in upscale magazines, the premium retail prices that luxury goods like Louis Vuitton command translate into handsome profits. The Louis Vuitton brand alone accounts for 60 percent of LVMH's operating profit. On the other hand, Louis Vuitton spends $ 10 million annually battling:

Despite the high expenses associated with operating elegant stores and purchasing advertising space in upscale magazines, the premium retail prices that luxury goods like Louis Vuitton command translate into handsome profits. The Louis Vuitton brand alone accounts for 60 percent of LVMH's operating profit. On the other hand, Louis Vuitton spends $ 10 million annually battling:

A) EU regulations.
B) counterfeiters in countries such as Turkey, South Korea, & Italy.
C) competitors in European countries.
D) suppliers of needed materials.
E) export freight and taxes.



Answer: D

Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries?

Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries?

A) Procter & Gamble
B) Bell Helicopter Textron
C) Nokia
D) Mercedes-Benz
E) Coca-Cola



Answer: B

Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If World Corp. signs a second contract agreeing to take partial payment for the plant in the form of lumber products produced at the plant, it is engaging in:

Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If World Corp. signs a second contract agreeing to take partial payment for the plant in the form of lumber products produced at the plant, it is engaging in:

A) barter.
B) switch trading.
C) offset.
D) compensation trading.
E) a hybrid countertrade arrangement.


Answer: D

When one of the parties to a barter transaction is not willing to accept the goods included in the transaction, that party is likely to utilize the services of a:

When one of the parties to a barter transaction is not willing to accept the goods included in the transaction, that party is likely to utilize the services of a:

A) switch trader.
B) Foreign Trade Organization.
C) Foreign Sales Corporation.
D) Mittelstand owner.
E) broker.


Answer: A

To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing agreed to purchase products from the UK whose value was equivalent to 130 percent of the contract. This type of pricing arrangement, which is common when the customer is a foreign government and the product has military applications, is known as:

To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing agreed to purchase products from the UK whose value was equivalent to 130 percent of the contract. This type of pricing arrangement, which is common when the customer is a foreign government and the product has military applications, is known as:

A) barter.
B) switch trading.
C) compensation trading.
D) offset.
E) dumping.


Answer: D

Which type of countertrade arrangement is required by governments seeking to reduce the budgetary impact of expenditures for defense or telecommunications?

Which type of countertrade arrangement is required by governments seeking to reduce the budgetary impact of expenditures for defense or telecommunications?

A) barter
B) switch trading
C) offset
D) compensation trading
E) none of the above



Answer: C

Which of the following forms of countertrade does not require use of money or credit between parties?

Which of the following forms of countertrade does not require use of money or credit between parties?

A) barter
B) switch trading
C) offset
D) compensation trading
E) none of the above



Answer: A

The direct exchange of goods or services between parties in lieu of monetary payment is known as:

The direct exchange of goods or services between parties in lieu of monetary payment is known as:

A) barter.
B) switch trading.
C) offset.
D) compensation trading.
E) counterpurchase.



Answer: A

In the 1970s and 1980s, the arrangement by which PepsiCo received payment for soft drink products sold to the Soviet Union was:

In the 1970s and 1980s, the arrangement by which PepsiCo received payment for soft drink products sold to the Soviet Union was:

A) switch trading.
B) barter.
C) offset.
D) compensation trading.
E) counterpurchase.



Answer: B

The most general term for the global phenomenon involving reciprocal business interactions between parties in various countries is known as:

The most general term for the global phenomenon involving reciprocal business interactions between parties in various countries is known as:

A) switch trading.
B) barter.
C) offset.
D) compensation trading.
E) countertrade.



Answer: E

Which of the following is true about proper use of the term "countertrade?"

Which of the following is true about proper use of the term "countertrade?"

A) The term "countertrade" is interchangeable with "offsets."
B) The term "countertrade" is interchangeable with "barter."
C) The term "countertrade" is interchangeable with "counterpurchase."
D) "Countertrade" is a blanket term that refers to several different types of business transactions.
E) The term "countertrade" is interchangeable with "dumping."


Answer: D

Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25 percent of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries. This situation underscores the importance of ________ in global marketing.

Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25 percent of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries. This situation underscores the importance of ________ in global marketing.

A) dumping
B) gray marketing
C) transfer pricing
D) price skimming
E) price fixing



Answer: C

"Cost-based," "market-based," and "negotiated" are three approaches to:

"Cost-based," "market-based," and "negotiated" are three approaches to:

A) dumping.
B) gray marketing.
C) transfer pricing.
D) price skimming.
E) counter trade.



Answer: C

Nintendo was fined nearly $ 150 million after it was determined that the video game company had colluded with European distributors. The distributors in countries with lower retail prices had agreed not to sell to retailers in countries with high prices. This is a classic example of:

Nintendo was fined nearly $ 150 million after it was determined that the video game company had colluded with European distributors. The distributors in countries with lower retail prices had agreed not to sell to retailers in countries with high prices. This is a classic example of:

A) price skimming.
B) market penetration.
C) price bundling.
D) price fixing.
E) transfer pricing.



Answer: D

Germany's Bayer Group was fined millions of dollars to settle a lawsuit alleging it had conspired with Archer Daniels Midland and other global companies to set prices for an enzyme used in animal feeds. What was the issue in this lawsuit?

Germany's Bayer Group was fined millions of dollars to settle a lawsuit alleging it had conspired with Archer Daniels Midland and other global companies to set prices for an enzyme used in animal feeds. What was the issue in this lawsuit?

A) price skimming
B) market penetration
C) price bundling
D) price fixing
E) dumping



Answer: D

If a company sells products in export markets at prices that are below fair market value and that can harm producers in the export market, that company may be accused of:

If a company sells products in export markets at prices that are below fair market value and that can harm producers in the export market, that company may be accused of:

A) market skimming.
B) using offsets.
C) pursuing artificially high margins.
D) dumping.
E) gray marketing.



Answer: D

Following the 1997 currency crisis in Asia, which American industry appealed to President Clinton for protection from foreign producers that were allegedly "dumping" products in the United States:

Following the 1997 currency crisis in Asia, which American industry appealed to President Clinton for protection from foreign producers that were allegedly "dumping" products in the United States:

A) auto industry.
B) computer industry.
C) steel industry.
D) photo products industry.
E) restaurant industry.



Answer: C

In the early 1990s, the U.S. International Trade Commission ruled that several Japanese manufacturers were selling active-matrix flat panel display screens in the U.S. at less than fair value and thereby injuring the sole U.S. producer of similar screens. The ITC's ruling concerned:

In the early 1990s, the U.S. International Trade Commission ruled that several Japanese manufacturers were selling active-matrix flat panel display screens in the U.S. at less than fair value and thereby injuring the sole U.S. producer of similar screens. The ITC's ruling concerned:

A) black marketing.
B) market skimming.
C) gray marketing.
D) dumping.
E) licensing.



Answer: D

When Tag Heuer, a marketer of luxury watches, takes out newspaper ads urging consumers to purchase Tag Heuer products from authorized dealers only, the company is most likely attempting to combat the ________ problem.

When Tag Heuer, a marketer of luxury watches, takes out newspaper ads urging consumers to purchase Tag Heuer products from authorized dealers only, the company is most likely attempting to combat the ________ problem.

A) countertrade
B) market holding
C) price escalation
D) gray market
E) market skimming



Answer: D